‘TRUST IS CRYPTO’S BIGGEST ISSUE’
But digital currencies are gradually entering financial system despite volatility
CRYPTOCURRENCY is creating an evolution in financial technology with its gradual introduction into the financial system despite its volatility.
Malayan Banking Bhd (Maybank) group chief risk officer Gilbert Kohnke said investors should understand risk tolerance before investing in a digital currency.
“We are in the early stages of this platform with different areas of certainty,” he said at a Maybank webinar on “Asean New Finance: Crypto Opportunities and Hurdles Confirmation” yesterday.
He said a lot of questions were left unanswered, including how financial institutions should bring cryptocurrencies into the mainstream.
Kohnke said the trust was the main issue that might hinder the wider acceptance of crypto investment.
“Trust is the biggest issue and it needs to be resolved. It also involves risk and this should be addressed as more people start diversifying their investment,” he said.
Blockchain Association cochairman and fund adviser Chia Hock Lai said as money became more digital, it presented a new form of limitation due to duplication.
“Initial representation of money was mainly physical in the early days. The advantage was that it allowed peer-to-peer money transfer but the downside was it was not convenient over long distance.”
As a result, Chia said trusted intermediaries, such as banks, were introduced but it also posed new problems as transactions took longer to process and came with fee charges.
“In 2009, bitcoin was launched to replace the intermediaries with a set of codes running on multiple computer servers.
“It cuts off the middlemen/intermediaries in order to trade money,” he said.
Ethikom Consultancy founder and chief executive officer Nizam Ismail said blockchain was the underlying technology for Bitcoin.
“It is a technology of trust and an immutable technology, being decentralised.”
He said blockchain technology disrupted financial services and cut off intermediaries.
“It is volatile for crypto, with a small per cent of money you can play with. But it is something that can potentially be quite rewarding,” he added.